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A Decade of Landmark Projects

Interview - May 30, 2019

In this interview for the Worldfolio, Mr. Yuji Okuma, President of Tokyu Land Corporation, gives us a unique insight into one of Japan’s largest real estate developers and presents the new landmark projects his company has undertaken.



In Q1 2018, Tokyo overtook London as the busiest real estate market in the world, with investment volumes surpassing the 9.1 billion$ bar. From low interest rates to increased corporate earnings, many factors influenced these numbers. What is your analysis of the Japanese Real Estate market today?

In 2012, Prime Minister Shinzo Abe launched his ambitious “Abenomics” program, which was composed of three arrows: monetary easing, fiscal stimulus and structural reforms. The success of the financial and monetary policies combined with the Bank of Japan’s attractive interest rates have placed the Nippon economy on the road to revitalization. As a result, borrowing money became more attractive, corporate earning shot up and capital began to circulate. Consequently, funds from private and corporate investors began pouring into real estate. For example, at Tokyu Land Corporation, we are actively participating in the renewal of Shibuya city; a once in a century opportunity. Today is the prime time for Tokyo to renew itself. Market fundamentals are solid, and both domestic and international investors are eager to participate in the revitalization of Japan’s capital.

Furthermore, the Tokyo 2020 Olympics have caused an increased international presence in the country, especially from other Asian countries. As a result, tourism has soared and the demand for certain sectors, such as hostelry, restauration and entertainment, has grown adjacently. The extraordinary increased in in-bound visitors is yet another reason to consider Japan as a suitable investment destination.

While certain critics argue that the market will gradually slow down after the Tokyo 2020 Olympics, I believe that in the medium-to-long term, it will pursue its steady growth. While the Olympic Games are a catalyst for growth, they are not the main reason for it; strong fundamentals and a stable economy are.


Foreign investments accounted for roughly 18% of the total investment volume last year, a number relatively low when compared to that of New York or London.

In Japan, the volume of stocks available is far smaller than that of other large cities, especially when observing other international capitals. Since many stocks are held by insurances and real estate corporations, it reduces the chances for foreign investors to independently enter the market.

Nevertheless, foreign entities remain eager to grasp the opportunities Japan has to offer. To that end, collaborating with a local partner is a viable and lucrative solution. At Tokyu Land, we recently engaged in a partnership with Norwegian Bank.

Prior to our collaboration, they had been trying to enter the Japanese real estate market for approximately ten years. By partnering up with us, they acquired a significant edge. We are proud that our association will help them achieve their objectives.


Last year, the office market was under criticism. The media speculated that the increased supply between 2019 and 2021 would not be matched by real demand. Currently, however, the vacancy rate for Tokyo’s Type A office buildings is less than 2%. What is your opinion on this subject?

We believe that these claims are unfounded speculations. If supply is increasing it is because demand has soared. For example, Shibuya is home to an increasing amount of IT and software developing companies. As the Shibuya area is considered trendy and attractive to the millennial workforce these firms employ, small and medium sized enterprises, along with already established firms like Google, are interested in relocating their offices to the area. Despite what the media is saying, certain areas of Shibuya have a 0% vacancy rate. Furthermore, buildings yet to be built are already fully reserved. Hence, we estimate that demand matches, if not overruns, supply. And this observation is not limited to Shibuya.


The Millennial generation has lost interest in traditional offices and prefers alternative open-spaces. Co-working offices, for example, have lived a surge in demand. Is your company adapting to these changing trends?

Large co-working companies are acquiring some of the best real estate spaces in the market. To match this trend, we have developed our own alternative: ‘Business-Airport.’ ‘Business-Airport’ is a collection of satellite offices that we created in response to the social needs of organizations, such as the desire to boost productivity, enhance creativity and offer a flexible work-style. Furthermore, ‘Business-Airport’ allows corporation to convert their office rent, which is traditionally considered a fixed cost, into a variable cost. We currently operate these membership-based offices at four locations in Tokyo; namely, Aoyama, Shinagawa, Tokyo and Marunouchi. The name ‘Business-Airport’ was chosen because these comfortable working facilities come with a high-level of hospitality and service similar to that of an airport lounge.

Judging by the initial success of ‘Business Airport’, we believe it has the potential to grow into one of our core business segments. Because of the shrinking demography, Japan’s workforce is decreasing and competition for human capital has grown fiercer. In order to secure labor and increase productivity, companies are trying to offer new advantages to their employees. To that end, ‘Business Aiport’ represents an attractive alternative to traditional facilities.


With Fukuoka’s ‘Big Band Tenjin’ project, the renovation of Nagoya Station, and the increase in Osaka’s commercial facilities, Japan’s real estate boom is not limited to Tokyo.

At Tokyu Land, we are investing large amounts of capital in Osaka, especially in the housing and office markets. The Osaka World Expo 2025 will pave the way for new developments in the area. Simultaneously, new regulations aimed at boosting the attractiveness of entertainment facilities by normalizing gambling could result in the opening of Japan’s first casino.

Furthermore, some of Japan’s regional areas, such as Niseko (Hokkaido Island) and Fukuoka, are experiencing increased amounts of investment traffic due to growing tourism activity. That being said, Tokyo and Osaka will remain business-centered cities and the attractiveness of office spaces will thrive in the years to come.


In the last couple of years, we saw that outbound investment from Japanese real estate companies skyrocketed. The majority of investments are going into developing Asian countries. Why do you think these firms are going into other Asian markets?

The emerging countries of Asia enjoy high growth potential, especially when compared to Japan. Furthermore, these countries welcome Japanese investments with the hope of acquiring our technical know-how.

Jakarta, for example, reminds me of how Japan used to be. Because the local population and government wants to continue growing and developing, they welcome us with open arms. To these economies, Japanese organizations have the potential to accelerate their development. Overseas investments are mutually beneficial. On the one hand, we bring high-skilled workers and state-of-the-art technologies from which they will be able to learn. On the other hand, these locations have a high-return potential, which increases our business chances. Even though transporting resources outside of Japan remains relatively expensive, the results are positive for us, for our investors and for local communities.


Tokyu Land Corporation recently invested and took part in the much awaited 425 Park Avenue building in New York City. Can you tell us more about this project?

Park Avenue 425 is the first new block-front building to be constructed in Park Avenue in around 50 years. Needless to say that it is an extremely exciting project for us and for New York. While we did not have extensive experience with regards to investing in New York, we saw an extra-ordinary opportunity to participate in a landmark project and directly pursued it. In New York City, Tokyu Fudosan’s brand recognition is gradually increasing thanks to this project. Furthermore, we are now able to receive detailed information about the real estate market in America. Our intel isn’t limited to New York only, we also monitor trends in the west coast and various other regions with potential.

This project was a successful strategic move for us and we are looking forward to proactively seeking more investment opportunities in the USA. Not only does the American market have high growth potential, it also enjoys an increased liquidity rate. Since there are many buyers and sellers, capital moves swiftly. It naturally represents an opportunity for us to extend our portfolio.


What have been the effects of America’s new Government on your US strategy?

The current situation of the American real estate sector is especially positive. Firstly, the American real estate market is highly secured. It enjoys strong fundamentals and positive economic performances. Secondly, the new administration is encouraging investment in the sector. President Donald J. Trump began as a real estate businessman and his views are sympathetic towards the market.

Even if the current government was to change, the USA would remain a lucrative destination.


Do you have any plans of expansion to Europe?

At this moment, our main focus is on the Asian region and the US. However, in the medium-to-long term, we would like to expand to Europe as well.


This year represents the last year of your Value Frontier 2020 plan. Could you give us more information on your strategy for the next 5-10 years?

Last year, we made a public offering and raised a large amount of capital. The funds we collected were utilized to increase our investment in the Shibuya re-development project. Today, our investment in Shibuya has passed the 3.5 billion JPY bar. This is the backbone of our mid-term strategy and it will remain our core operation for the years to come.

Furthermore, we plan to further diversify our extensive asset portfolio. We want to bring comfort to more aspects of people´s lifestyles.


If we were to come back in 10 years, what achievements do you hope to have witnesses?

In 10 years’ time, I believe that Shibuya ward will have transformed into a trendy and bustling metropolis recognized as one of the best locations in the world. It will offer more diversity and richness, and will be a model for other international cities. As many people will come to Tokyo just to see Shibuya, it will be a true pride to know that Tokyu Land played an important role in transforming Shibuya into a capital within the capital.